China's producer inflation surged to its highest level in nearly four and a half years in October, driven by rising crude oil costs. The producer price index (PPI) climbed 5.7% year-over-year, outpacing September's 5.0% increase and exceeding economist forecasts of a 5.3% gain. The surge was largely attributed to higher expenses in energy-intensive sectors like coal mining, oil extraction, and chemicals.
Meanwhile, consumer inflation cooled slightly, with the consumer price index (CPI) rising 0.7% year-over-year, down from 0.9% in September. The monthly CPI remained unchanged, matching forecasts after a 0.2% increase in September. Core inflation, which excludes volatile food and energy prices, eased to 0.8% from 1.0% in September.
The data reflects persistent cost pressures from elevated global oil prices, which have not yet fully translated to consumer prices due to weak domestic demand. China's economy grew faster than expected in the third quarter, supported by strong exports, but household demand remains sluggish. Trade tensions and global economic uncertainty are also weighing on the outlook for exports.
An official at China's state planner noted that external shocks are increasingly impacting the economy, highlighting the imbalance between robust supply and weak domestic demand. The struggling stock market, particularly AI-related stocks, could further dampen consumer spending. Efforts to stabilize the yuan and capital markets have yet to boost consumer sentiment.